The Environment Agency has granted Cuadrilla the environmental permits for its proposed shale gas exploration site at Westby-with-Plumptons in Fylde.
The site off Preston New Road will be used for drilling, hydraulically fracturing and testing the flow of gas from four exploration wells.
The said that it has over the last six months conducted "a rigorous assessment of Cuadrilla's applications" and carried out two periods of extensive public consultation.
Cuadrilla said the testing site would help it to determine how much natural gas could be extracted from the shale rock that lies more than a mile beneath the surface.
The energy company submitted plans for the project to Lancashire County Council in May 2014. The proposals also include the installation of a network of seismic monitoring stations within a 4km radius of the proposed exploration site.
Francis Egan, chief executive of Cuadrilla, said: "This is an important seal of approval from the regulator that the exploration of shale gas can be done responsibly. This follows a robust and rigorous review of our permit applications, and unequivocally demonstrates that, as we have committed, the local environment will be well protected throughout our proposed exploratory operations."